Time Warner ‘no thanks’ to Charter
January 14, 2014
After Charter Communications went public with an offer for Time Warner Cable worth $61 billion Time Warner has rejected it as “grossly inadequate”.
Backed by John Malone’s Liberty Media, Charter has made overtures and offers to Time Warner Cable since last summer, publicly advocating consolidation in the industry. Charter’s public offer was a cash and stock offer that values its target at $132.50 per share.
Time Warner Cable said it was open to a deal at a price of $160 per share. It called Charter’s three approaches, at $114, $127 and $132.50, “a non-starter”.
Time Warner Cable’s shares closed at $132.40 on Monday. Charter’s market capitalisation stood at $14 billion, with Time Warner Cable at $34 billion.
“We have reservations about the value of Charter stock. Our objective, essentially, is to maximise the amount of cash in any deal so that we aren’t subject to the vagaries of their stock price,” Rob Marcus, Time Warner Cable chief executive, told the Financial Times.
Tom Rutledge, Charter chief executive, told the FT that Time Warner Cable’s demand was an “unrealistic price expectation . . . designed to be dismissed” given that Time Warner Cable’s shares have soared nearly 40 per cent on deal speculation in the past six months.
He added that several Time Warner Cable shareholders had approached Charter, endorsing a deal and asking Charter to ratchet up its efforts.
Liberty said it supported Charter’s efforts and had been “encouraged by Time Warner Cable shareholders to pursue this opportunity”.